Green Building Law Update : Green Building & Construction LEED AP, Lawyer & Attorney Chris Cheatham : Washington DC, Virginia, New York City

If you participate on building projects that are seeking LEED certification, this news may come as a relief to you.  According to Marian Keeler of Simon & Associates, the United States Green Building Council (USGBC) is reconsidering its decision to stop making Credit Interpretation Requests (CIRs) public.  

I have previously described a CIR as follows:  
 

In June 2009, I reported that the USGBC had announced that, effective June 26, 2009, a CIR would only be applicable to the project that submitted it.  At the time, I suggested that "[w]ithout public CIRs, architects, engineers and contractors are going to have more trouble interpreting credits and determining strategies that will successfully achieve a LEED credit."

It appears that the USGBC is now reconsidering its decision and plans to implement a new CIR system:

I will reach out to the USGBC for further information.  Why do you think the USGBC is reconsidering?

Related Links:

Why Do Non-Public CIRs Mean LEEDigation? (GBLU)

CIRs and Precedence Policy (LEEDuser)

Photo credit: eddiewls

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Last Thursday, during a webinar on green building legal issues, I stated the following:

"I really believe schools will be a hotbed for green defect claims, in terms of energy efficiency, and other green building components.  Schools rely on tight budgets. . . .  Be careful what you are promising on these green school projects."

On Friday, I read an article titled "Construction Delayed at West School," which led with the following paragraph:

"Construction is at a stand-still at Washington-Nile School, where issues surrounding state-mandated LEED (Leadership in Energy and Environment Design) elements have placed the new middle school building project over-budget. Now attorneys working for the school are researching the equity of LEED funding for schools in Ohio; the outcome of which could also affect building projects at New Boston and Clay."

I was close.  

In Ohio, the Ohio School Facilities Commission (OSFC), administers the state’s Kindergarten through 12th Grade public school construction program and helps school districts fund, plan, design, and build or renovate schools.  In a previous post, we highlighted the OSFC's green buiding requirement for Ohio schools:

"OSFC Resolution 07-124 . . . mandates that all newly constructed or substantially renovated school buildings that are state funded achieve a minimum of Silver certification in the US Green Building Council's LEED-Schools (Leadership in Energy and Environmental Design) rating system with emphasis in energy conservation."

As highlighted in the article, the OSFC accepted the Washington-Nile School (tiny red dot in the photo to the left) as a special-needs project.  Because of the district’s low wealth base, the OSFC agreed to provide 98 percent of the funding for a new $16 million middle school. The remaining 2 percent (about $320,000) was paid from the school’s General Fund.

By accepting the OSFC funds, the school district is required to build the new Washington-Nile School to LEED Silver certification.  But the bids for the school were over-budget despite numerous changes made to the design:  

"'We knew a little about LEED. We didn’t know much, so they (the OSFC) educated us and they did a very good job. We bought into that and we designed accordingly. We made sure we had some educational LEED credits,' Washington-Nile Superintendent Patricia Ciraso said. She explained that while striving to meet these LEED requirements, the school had to give up other features they had hoped to add. By choosing to cut-back on windows, the school had change its lighting system, which means redesigning the entire electrical system — and what they ended up with still was estimated at least $1.2 million over-budget."

On Friday, we will look at allegations by the Washington-Nile school district that the OSFC is not properly funding the necessary LEED-certification costs.  You will want to check back, as these allegations include a creative legal challenge to the state's funding of green schools, which could have broad implications for other state green building programs. 

Related Links: 

Sensible Interview:  OSFC (GBLU)

Live Webinar (GBLU)

Construction Delayed at West School (Portsmouth Daily Times)

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On Wednesday, I posited that codifying the LEED rating system, or any other third party green building rating system, is not a viable option for an entire state.  

Why?  Here are three primary considerations:  

1.  There are troubling antitrust issues associated with the LEED rating system.  These antitrust issues are significantly exacerbated by the incorporation of LEED into regulations or building codes.

2.  The LEED rating system was never intended to be codified.  In fact, the LEED rating system is meant to apply to only 25 percent of new construction starts. 

3.  I believe the USGBC has recognized the problems associated with codification of the LEED rating system.  In response, the USGBC, along with other groups, is quickly pushing along publication of ASHRAE 189.1P, which codifies many of the elements of the LEED rating system.  This is just a hunch, but I anticipate that the USGBC will start urging jurisdictions to adopt ASHRAE 189.1P instead of the LEED rating system.

Can you think of any other reasons?    

Photo: ilaria gallo

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[Please join us on January 20 for the next Green Professionals Happy Hour.  See details in the attached flyer.]

Many federal agencies are applying the LEED rating system to buildings in the United States, but one agencies unique use of the system recently caught my attention.  The Army Corps of Engineers is attempting to modify the LEED rating system for international application: 

"Translating the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Silver certification into a standard for all international construction—which the U.S. Army Corps of Engineers has pledged to do—may be impossible.

Creating high-performance facilities is not the issue, but holding to a LEED rating is problematic. “LEED is a very U.S.-based standard, and trying to take that and apply it overseas is difficult. But the Army mandate is ‘do it,’” says Jeanette Fiess, who represented the Corps’ LEED Sustainability Directorate of Expertise at a November 'LEED Awareness' workshop for Corps staffers in Oberammergau, Germany. The directorate, a virtual entity with experts in many Corps districts, is trying to figure out how to comply."

"Part of the problem is many countries in which the Corps builds have their own versions of LEED, and they don’t line up well enough in philosophy or detail to map from one to another. The Japanese have the Comprehensive Assessment System for Built Environment Efficiency (CASBEE), South Korea has its mandatory Green Building Certification Program, and Germany has the DGNB, or Deutsche Gesellschaft für nachhaltiges Bauen e.V, from the German Sustainable Building Council."

What do you think of the Corps of Engineers’ attempts to modify the USGBC’s LEED rating system for other countries?

Related Links:

Building To LEED-Silver May Not Survive First Encounter (ENR)

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[Today we are highlighting the what is, in my opinion, the most important green building legal story of 2009. 

With the launch of LEED v. 3.0, the United States Green Building Council (USGBC) announced it would revoke certification of projects that failed to meet minimum requirements.  The possibility of LEED de-certification creates new liability issues for all parties involved in any green building project and emphasizes the growing emphasis on building operations. 

This post resulted in a firestorm of comments (31) that are more interesting than the original post.  Thanks to everyone for contributing to the informative conversation.]

This Post is Really Important and Is Not for the Faint of Heart

Disclaimer:  If you are sensitive to or frightened by new risks and liabilities in the green building industry, please skip this post.

On Monday, I highlighted the USGBC's decision to create requirements to ensure a building's performance matches modeled energy savings.  I finished the post by asking, what happens to projects that do not comply? 

Okay, brace yourself: 

NOTE: CERTIFICATION MAY BE REVOKED FROM ANY LEED PROJECT UPON GAINING KNOWLEDGE OF NON-COMPLIANCE WITH ANY APPLICABLE MPR.  IF SUCH A CIRCUMSTANCE OCCURS, REGISTRATION AND/OR CERTIFICATION FEES WILL NOT BE REFUNDED. 

It is time to introduce a new word into your green building vocabulary:  de-certification. 

Every time I start thinking about the implications from de-certification, my head starts spinning and I have to sit down. 

It just happened again. 

I have definitely not uncovered all of the potential issues, but here are three that immediately jump to mind:

1.  De-certification makes regulations tied to LEED certification very difficult to enforce.  What does a jurisdiction do if a project is de-certified?

2.  Insurers and sureties are going to be extremely concerned about coverage issues after design and construction work is complete.  Could an architect or contractor remain on the hook for potential de-certification long after a project has been completed? 

3.  For you owners out there, the commitment to provide energy data must carry forward if a building or space changes ownership or lessee.  How in the world do you write this into a contract? 

The room is starting to spin again.  Please elaborate on any additional risks and liabilities implicated by de-certification in the comments.

Photo:  Kevin (iapetus)

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The future of green building regulations usually starts in big cities. Cities like San Francisco, Washington, D.C. and New York City were some of the first to incorporate green building certification into regulations and building codes. The next frontier in green building regulations will be energy performance and New York City seems to be at the forefront. The New York Times recently reported this anecdote about future New York City green building policy:

The New York City Council is drafting a law that will dispatch auditors to measure large buildings’ energy use, with potential fines for landlords who fail to retrofit their systems.

There are other examples of regulations focused on energy efficiency:

• In Washington, D.C., the Energy Star Benchmarking program requires the reporting of energy data by owners of buildings.
• At the federal level, the Department of Energy has its sights set on creating an energy labeling system for buildings and homes.

The United States Green Building Council is also modifying its LEED rating system to reduce actual energy usage. With the launch of LEED 2009, the USGBC now requires the reporting of energy data. As we reported in September, Scot Horst, USGBC executive, has stated that the LEED certification will eventually require buildings to achieve a specified level of energy performance.

The eyes of the green building industry are focused on energy efficiency. You should be too.

Related Links:

In Washington, DC, Energy Star Benchmarking Law Arrives (CoStar Group)

The Future of LEED: Re-certification (GBLU)

So Who Left the Lights On? The System Knows (NYT)

Super Star Green Label Proposed (GBLU)

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I often argue there are three primary non-environmental reasons for seeking green building certification: profit, regulatory compliance and press/goodwill.  An article in the Minneapolis/St. Paul Business Journal recently looked at diminishing press for buildings that achieve LEED certification: 

A few years ago, it was a big deal when any building announced it was LEED certified. There were regular tours, speaking engagements, white papers, awards and news stories.  Today, when a building like Orion Associates new headquarters attains Leadership in Energy and Environmental Design status, it may or may not be noticed by anyone besides the building owners and tenants, regardless of what level or type of LEED certification it attains -- bronze, silver, gold or the most rigorous level, platinum.

The only cause for dwindling attention is the sheer number of projects that have been designated LEED. In Minnesota, that number (at all levels, from certified to platinum) has exploded from nine to 98 over the past two years. In September 2007, there were 89 projects registered and awaiting certification. Today, there are 262.

The marketing benefits that result from seeking green building certification can depend on the number of certified buildings in the region.  The fewer certified green buildings in the region, the more likely the owner will receive positive press for achieving certification. 

Have you noticed less positive press for buildings that achieve LEED certification?  

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[Ed. Note: written by Steve McBrady]

Starbucks coffee has always been an integral part of what we do here at Green Building Law Update. Until now, it was primarily a means of keeping our readers awake while we write endlessly on Green building and sustainable development in government contracts and in commercial construction, or discuss emerging Green regulatory issues.

Today, however, Starbucks has moved front-and-center for another reason – the announcement, on November 12, 2009, that as of 2010 all new Starbucks stores will be LEED certified:

Over the next six months, Starbucks will build or renovate a minimum of 10 pilot stores in six different bioregions around the world. Once the pilot stores’ environmental strategies are audited and approved, they can be replicated elsewhere. This capability will allow Starbucks to reach its goal of achieving LEED certification for all new company-owned stores worldwide beginning in late 2010.

(Starbucks Press Release)

This is a major development for several reasons, and not simply because of the improved Indoor Environmental Quality our readers will enjoy as they wait in line for a grande skim chai latte (sans foam). Starbucks’ announcement comes on the heels of Marriott International Inc.’s announcement this week that it will dramatically expand its green hotel portfolio over the next five years by introducing a new LEED® hotel prototype for its Courtyard brand.

The green hotel prototype, which will be available in April 2010, will save owners approximately $100,000 and six months in design time, and reduce a hotel’s energy and water consumption by up to 25 percent, based on national averages. These savings, combined with incentives offered in many jurisdictions, could provide a payback for the LEED building investment in about two years.

(Marriott Press Release)

In 2010, Marriott also plans to roll out similar green prototypes for its Fairfield Inn, Residence Inn, SpringHill Suites and TownePlace Suites.

So, what does this voluntary move toward LEED mean for Green building law? Well, in the distant past, we discussed the D.C. Green Building Act of 2006, which at the time was considered ground-breaking legislation because it required private developers to meet certain LEED criteria on buildings over 50,000 square feet. What these announcements signify, however, is the emergence of a Green building movement within the private sector.

How will federal, state, and local governments react to being out-Greened by the private sector? Stay tuned.

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The Energy Star program, responsible for certifying energy efficient products, is about to undergo some major changes. Recently, the program, run by the Environmental Protection Agency (EPA) and the Department of Energy (DOE), has come under fire from a number of groups:

"Various stakeholder groups, such as manufacturers, utilities and even Consumer Reports , the monthly magazine published by the Consumers Union, have complained in recent years that Energy Star . . . is too inclusive. An internal audit of the program by the Department of Energy found that there is inadequate tracking of whether the appliances have actually met the required specifications for energy efficiency."

The New York Times article lists three primary complaints with the Energy Star program:

1. Too many products are achieving the Energy Star rating, casting doubt on whether evaluations have been properly performed.
2. The program has been slow to keep up with technical advancements.
3. The program has been hamstrung by jurisdictional disputes between EPA and DOE.

The complaint that the Energy Star Program has failed to keep up with technical advancements was of particular interest to me, as it may foreshadow problems with green building regulations that incorporate rating systems. Like green products and appliances, the green building industry and building rating systems are constantly evolving through technical advancements. For example, with the launch of LEED 2009 (which replaces LEED 2.2), the United States Green Building Council's LEED rating system will now be revised every two years.

Here's my concern: as I have written about numerous times, many green building regulations require LEED or other green building certification. Many jurisdictions have created green building regulations that incorporate the previous version of the USGBC's LEED rating system, LEED 2.2.

How will these jurisdictions keep up with advancements in green building rating system?

Related Links:

Congress and Agencies Debate an Overhaul to the Federal Energy Star Program (New York Times)

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(WBJ) (subscription req.)

(GSA)

(GBLU)

(GBLU)

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Something very important popped out at me when I re-read the New York Times article about the green buildings not performing as anticipated.  The green building highlighted for poor energy performance is a General Services Administration building: 

"The building’s cooling system, a major gas guzzler, was one culprit. Another was its design: to get its LEED label, it racked up points for things like native landscaping rather than structural energy-saving features, according to a study by the General Services Administration, which owns the building."

Photo: wilkins lee

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I found a YouTube video of a green roof being set on fire that I planned to post today.  You know another topic would have to be very important to pre-empt a green roof fire video. 

Such a topic has revealed itself. 

On Wednesday, we started talking about the New York Times LEED energy performance article.  Many who understand the LEED rating system know that there has been some problems with LEED buildings not performing as anticipated in terms of energy consumption.  What interests me most is what the USGBC plans to do to resolve these problems going forward.  Scot Horst, USGBC senior vice president, revealed some important plans in the article: 

For regular readers of Green Building Law Update, the concept of re-certification may sound familiar.  Here's what I had to say on the topic back in July:

 

I wish I had simply had the guts to say the USGBC will require LEED re-certification for future projects.  Because it is going to happen. 

Links

Some Buildings Not Living Up to Green Label (NYT)

Could LEED NC and LEED EBOM Join Forces? (GBLU)

Photo: suttonhoo

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You may have recently read the New York Times article about the gap between LEED building designs and actual energy performance.  If not, I would recommend reading the article.  You may have also noticed a reference to "construction lawyers": 

"Already, some construction lawyers have said that owners might face additional risk of lawsuits if buildings are found to under-perform."

In May 2009, I spoke with Ms. Navarro about legal issues that could arise from under-performing green buildings.  I told her that under-performing green buildings might result in unhappy owners when energy performance promises were not met.  Even worse, owners might interpret a green building energy performance design as a promise and be disappointed when actual performance does not match.  Finally, I pointed Ms. Navarro to Malcolm Lewis of CTG Energetics, who actually corrects energy performance gaps that occur in new buildings. 

A lot has happened since my conversation with Ms. Navarro.  The USGBC has taken big steps to address the energy performance gap, which the article covers.  Remember when we discussed the USGBC's new requirement for reporting of energy data from LEED buildings?  Remember how the USGBC threatened to de-certify buildings that do not report energy savings?  These actions mean the USGBC is addressing the energy performance gap head on. 

Want more proof of how seriously the USGBC is taking this issue?  This is from a June 2009 press release from the USGBC:

The U.S. Green Building Council announced this week that Christopher Pyke, Ph. D. has been appointed Research Director. Dr. Pyke joins USGBC from CTG Energetics in Irvine, Calif., where he was National Director of Climate Change Services.   He brings a strong background of leadership in green building research to USGBC, underscoring its commitment to raising the bar on research related to green building science and technology, including the performance of LEED-certified buildings. This research will be vital to the ongoing development of the LEED green building certification program.

CTG Energetics is one of the leading building energy performance companies.  In hiring Dr. Pyke, the USGBC is investing significant resources into researching energy performance. 

Of course, this is all old news.  Friday we will discuss new information revealed by the USGBC's Scot Horst that has enormous ramifications for LEED.

Photo:  Geoff Livingston

Links: 

Some Buildings Not Living Up to Green Label (NYT)

Malcolm Lewis (CTG)

How I Learned to Stop Worrying and Love LEED De-Certificaiton (GBLU)

This Post is Really Important and Is Not For the Faint of Heart (GBLU)

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When I first read about Energy Ace's LEED certification guarantee, I thought it was nuts.

Then I read a Co-Star article and realized Energy Ace's guarantee was brilliant.   

When I read a green building regulation, I always look at the enforcement mechanism.  And when I look at a green building contract, I always focus on the potential damages.  Energy Ace's LEED certification guarantee is brilliant because it limits potential damages if certification is not achieved:

"If a project misses its LEED target level (like Silver or Gold) or fails to earn certification altogether, Energy Ace would refund its LEED administration fee, which is between 30 percent and 45 percent of its total fees, Robertson said.

Simply brilliant.  Energy Ace provides a LEED certification guarantee that reassures owners while simultaneously limiting Energy Ace's potential damages. 

The potential damages stemming from a project's LEED certification failure are much greater than the limit described by Energy Ace.  For example, in Shaw Development v. Southern Builders, the owner sued for $635,000 when the project failed to achieve certification by a certain time.  I have never heard of a triple digit LEED administration fee. 

Brilliant, right? 

By the way, I can help you write a similar contract...

Guaranteeing LEED Certification (CoStar)
Southern Builders v. Shaw Development: Green Building Damages (GBLU)

Photo: ejpphoto

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Reminder:  Don't forget to register for Green Building Law Update's Birthday Happy Hour this Thursday!  

This week, we are going to be looking at an issue near and dear to me: guarantees of LEED certification.  Two publications from last week made clear to me the wide variety of views on the issue:

(1) Washington Business Journal's On Site, "Hot Potato" by Vandana Sinha (print only):

For the most part, these players have come together time and again to score a LEED designation and plaque.  But what happens when one of the parties comes up short, and the project misses its LEED goal?  Who's at fault?
...

Green building mandates make the question even more important. . . . "As more LEED mandates come out that require certification, this becomes a bigger deal," says Cheatham, a LEED-accredited D.C. construction attorney with Watt, Tieder, Hoffar & Fitzgerald LLP, where his primary job is to worry about risks associated with green building and things like the D.C. performance bond.  "That's actual cost.  That's money.  The owner will recognize that risk and more likely want to hold somebody accountable at the end."

(2)  CoStar, "Guaranteeing LEED Certification" by Andrew C. Burr:  

Energy Ace Inc., an Atlanta-based energy services and LEED consulting firm headed by Wayne Robertson, is offering what it calls the industry's first LEED certification guarantee.

At a time when many cities and states have begun mandating LEED-certified buildings, “We can offer clients a certainty that their project is going to be certified and remove that anxiety,” Robertson said.

...

“One of the senior architects was saying that these mandates are putting us in a position to offer a guarantee, and we can’t do that,” Robertson said. “And I’m thinking, yes we can.”

Who is right?  Is my concern about LEED guarantees warranted?  Or are companies like Energy Ace Inc. able to avoid issues surrounding LEED guarantees?  Are we both right?  

Photo: Wade Roush

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When I read about the AIGRMGreen Reputation Coverage, which covers bad press for green building projects, I immediately thought of allegations of greenwashing. From wikipedia:

Greenwash (a portmanteau of green and whitewash) is a term used to describe the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing.

One particular type of greenwashing involves projects seeking or building to LEED standards. A recent Grist article detailed one instance of alleged greenwashing through the use of LEED:

Take, for instance, the highly controversial parking garage plopped in the middle of Atlanta’s Piedmont Park. Conceived and championed by the Piedmont Park Conservancy and the Atlanta Botanical Garden as a way to raise funds and provide parking space for folks attending the park’s special events (like the upcoming “Green Concert” starring Sir Paul McCartney), this “built to LEED standards” structure has been largely derided by neighborhood groups, including Friends of Piedmont Park (FOPP), as being a decidedly improper use of park space.

“We’re upset about the conversion of more public green space to cement and concrete,” says Jack White, a FOPP board member.

Grist is a very popular environmental website. After this story ran, other websites then picked up the story, resulting in substantial negative publicity for this construction project.

Is this the type of scenario that would be covered by the AIGRM Reputation Coverage? If the Piedmont Park had this coverage, would the Grist article represent a reasonable claim under the policy? And again, how would you measure the associated damages?

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You may be relieved to learn that I am temporarily done discussing LEED de-certification.  The USGBC will be releasing an addenda to the Minimum Project Requirements, at which time we will discuss this issue anew.  Until then, lets move on...to another LEED legal discussion. 

One green building legal development that I, and others, have been concerned about is the inclusion of LEED into government regulations, particularly when applied to private projects.  Is it constitutional to require private parties to comply with a third party rating system, namely the USGBC's LEED rating system?  What other legal issues arise from LEED mandates? 

Brad N. Mondschein's green energy blog raised an interesting case study regarding Connecticut's recently passed LEED mandate.  Under the regulation, the State Building Inspector is required to revise the State Building Code to incorporate LEED standards. 

Turns out, the State Building Inspector is very concerned about revising the State Building Code to incorporate LEED:

The state Department of Public Safety is still trying to write building-code language that reflects the new requirements for commercial projects.

“We don’t have the framework in place to implement it properly,” said Lisa R. Humble, the state building inspector.

After the law was passed, the State Building Inspector asked for an opinion from the Attorney General regarding the legality of the mandate.   

Andrew Falk did a great job finding a copy of the Attorney General's informal opinion letter (PDF) to the State Building Inspector.  From Janet Ainsworth from the Connecticut Department of Public Safety: 

The attached is the informal advice (PDF) received from the Office of the Attorney General. The AG opinion does not address the constitutionality of the legislation.  Rather, it discusses whether the statutory provisions may be enforced in the absence of applicable language in the State Building Code.  The Department of Public Safety is engaged in the development of the applicable language to be added to the State Building Code.  At this time, I am unable to estimate when the amendment to the State Building Code to address the green building requirements of the Connecticut General Statutes will be enacted.

Check out the letter (PDF) as we will be discussing it in future posts.  What's your take on the letter?

*Turns out, the Attorney General letter does not address constitutionality of LEED mandates, as originally thought.  We will save this issue for another day. 

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[Sometimes I get great emails from readers and we discuss a green building topic or blog post.  Then I sit on the topic for a while, waiting for the right time to share with the Green Building Law Update readers.  Now seems like the right time to share an email I received from a reader.  

I received this great email from a reader who manages the operations and maintenance of a LEED Gold Certified building.  What follows is his response to my question "how are the green building efforts going?"]
 

At its best the going is very slow. At its worst... we're kind of afraid to go.

Photo:  Jim at Sonicchiken

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With the recent announcement that LEED certified projects will have to report energy performance data, the USGBC has signaled its intent to take on under performing green buildings.  LEED 2009 requires the reporting of energy performance data, but does not include actual energy performance requirements.  I have no doubt that the USGBC will require some minimum levels of actual performance in the next version of LEED. 

Just look at the USGBC's recent press release (PDF): 

USGBC will be able to use the performance information collected to inform future versions of LEED. 

“Building performance will guide LEED’s evolution. This data will show us what strategies work – and which don’t -- so we can evolve the credits and prerequisites informed by lessons learned,” said Brendan Owens, USGBC’s vice president of LEED technical development.  

I guess it is prediction time.  At the very least, the next version of LEED will require more post-construction, post-substantial completion strategies for certification. 

Or the USGBC could simply merge two rating systems: LEED for New Construction with LEED for Existing Buildings Operations and Maintenance (LEED EBOM).  With LEED 2009, the two rating systems are already on the same point scale.  And one of the ways to comply with Minimum Project Requirements is to achieve LEED EBOM certification every two years. 

What opportunities and pitfalls does this approach present?

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If there was a LEEDigation doomsday clock, I would move it up about 5 minutes towards midnight based on the following decision by the USGBC.* 

Real Life LEED recently reported that the USGBC has decreed that, starting June 26, 2009, Credit Interpretation Requests (CIRs) will no longer be applicable to all projects: 

"Effective June 26, 2009, credit interpretation requests (CIRs) submitted by any registered project will no longer be vetted by USGBC or its LEED Technical Advisory Groups. As a result, CIR rulings will now be applicable only to the project that submitted them. For LEED version 2 projects, rulings on CIRs submitted prior to June 26, 2009, will be honored until they are retired by USGBC or incorporated into general USGBC-issued project guidance, such as through errata or addenda."

All you non-practitioners out there may be wondering what the heck a CIR is and why this matters.  The best way for me to explain a CIR is to compare it to case law. 

When you are talking to a client that is thinking about a lawsuit, one step you may undertake is reading up on case law.  You read case law to find a factually analogous situation to determine if your client has a good chance of winning. 

CIRs function the same way as case law.  To achieve LEED certification, a project must achieve a certain number of credits.  But the requirements for each credit are often open to interpretation.  To resolve this uncertainty, a technical advisory board evaluates each CIR to determine whether or not a credit should be granted.  Historically, USGBC has published these credit  interpretations to inform other builders and designers in future projects.  The first comment after the Real Life LEED post really hits at the importance of CIRs:

Wonder why they decided to do this, public CIRs help project teams immensely. They give good information on how the USGBC look at and interpret credits so that we could submit proper documentation or know what is and isn't acceptable strategies to meet the credits. I don't think LEED is in the stage where it is clear enough to not be interpreted several different ways.

You probably already see why LEEDigation is more likely without public CIRs.  Without public CIRs, architects, engineers and contractors are going to have more trouble interpreting credits and determining strategies that will successfully achieve a LEED credit.  As a result, the likelihood that projects will fail to achieve LEED certification increases dramatically.  As we've discussed, failure to achieve promised LEED certification leads toLEEDigation.

On Monday, we will look at why the USGBC had to do away with public CIRs.

But what do you think about this change? 

*To be clear, the USGBC had to make this business decision.  My post on Monday will go into more detail as to why this decision was necessary.

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On Wednesday, we discussed the LEED 25 percent rule: the LEED rating system was only intended to apply to the top 25 percent of buildings.

It is important to remember this premise when considering what is happening in the green building industry today. Many cities are mandating LEED certification for public and private buildings. For example, in Washington D.C., all new construction of private buildings greater than 50,000 square feet will have to be LEED certified after January 1, 2012.

As cities, states and federal agencies are mandating LEED certification, you simultaneously have the USGBC "raising the bar" for green buildings by bi-annually updating the LEED rating system to include even more stringent requirements for certification. The USGBC's goal is not for every building in the country to be LEED certified. Instead, the USGBC wants "to bring in even greener and greener buildings."

You see the problem there. I know you do. But I will say it anyways.

Mandates require 100 percent compliance.

The USGBC is designing a system that only the leading 25 percent of buildings can comply with, at least in terms of certification.

Those two numbers do not add up.

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Yesterday, while preparing for my "Green in the Stimulus" talk, I came across something both hilarious and frightening. 

StimulusWatch.org has provided an inventory of proposed projects that could benefit from the stimulus.  The list was prepared from a list of shovel-ready projects prepared by the U.S. Conference of Mayors .  While reviewing the list for "LEED" projects, to my great horror, I made the following discovery:



If an entity is seeking "LEEDS" certification, is the project really "shovel-ready"?  And no, that is not a rhetorical question. 

Related Links: 

• "The Stimulus:  Now for the Hard Part" (GBLU)
• The Stimulus:  Green Building Provisions (GBLU)

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In two previous posts prior to Greenbuild, Green Building Law Update focused on reasons to build green in the slumping economy.  Continuing that theme, here’s another example of how green buildings help parties distinguish their projects as demand for new construction decreases:

 “LEED for Existing Building helps owners compete in tough market”

You may know that the USGBC has several different green building rating systems, one of which is LEED for Existing Buildings.  Instead of building a new shell or changing the exterior or interior structure, LEED for Existing Buildings deals primarily with changes to a building’s operations and management systems.
 
How can you use LEED for Existing Buildings to distinguish your green building project?

“LEED for Existing Buildings can help differentiate a building owner in an existing building market and allow them to stay competitive with new building stock,” says Barbara Ciesla, co-leader of the sustainable design group of HOK Canada’s Toronto office.

I hope you see the opportunities created through green building projects, despite the current recession.  You can increase your likelihood of obtaining scarce financing.  You can build for the future state of art.  Most importantly, you can distinguish your project from the surplus of available space.

Related Links: 

• LEED for Existing Buildings Helps Owners Compete in Tough Market (Daily Commercial News)
• LEED-EB Helps Owners Compete In Tough Market (HOK)
• Need Green, Build Green (GBLU)
• The State of Green (GBLU)

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Here at Green Building Law Update, we remain troubled by the disbanding of the proposed ASHRAE 189.1 green building code committee, but we have to point out one bright spot. 

As you may recall, last week we  discussed the merits of the “Proposed Standard 189: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings" and the disbanding of a committee that was to create the code, apparently due to pressures from industry groups.   After the committe was dissolved,  the USGBC voiced strong support for the green buiding code: 

Brendan Owens, vice president for LEED Technical Development at USGBC, told EBN that it was “very surprised at this action taken by ASHRAE,” adding that USGBC is trying to learn more about ASHRAE’s reasons.

 

“We want to make sure that this is the best path forward,” Owens said. Acknowledging the uncertainty about Standard 189, Owens noted that a minimum green building standard that can be incorporated into codes is “so fundamental to everything USGBC is about, we are very committed to making sure it happens.”

• Uncertain Future for ASHRAE Standard 189 (BuildingGreen)
• Industries Halt Proposed Green Code (GBLU)

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Last week, Green Building Law Update questioned whether governments should be requiring LEED certification through regulations and mandates.  Assuming governments should get out of the green building certification business, what then should governments do to support green construction strategies?  There are generally two options, one of which we will discuss today:  green building codes. 

Green building codes essentially incorporate green building strategies into construction codes.  By incorporating green building strategies into code, governments can not only mandate the strategies they deem most important but also avoid the costly and time-consuming certification process. 

Apparently, not everyone agrees with me.  Shari Shapiro first brought my attention to the fact that the committee constituting the “Proposed Standard 189: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings” recently disbanded.  Proposed Standard 189-P was supposed to serve as a minimum green building code. 

A committee composed of members from ASHRAE, the USGBC and the Illuminating Engineering Society of North America (IES) had been put together in 2006 to work on the standard.  But on October 14, 2008, the committee was suddenly disbanded and the reasons remain unclear:   

Several committee members discussed the move with EBN, all of them speaking off the record, either because they were unauthorized to speak by the organizations they work for, or did not want to jeopardize their chances to rejoin the committee.

Discussing resistance from various industry groups, including steel, gas and utilities, wood, and building owner interests, one committee member said, “We must have been doing a good job.” While those trade associations had specific complaints in some cases, in others they were unsupportive of ASHRAE’s involvement, as a mechanical engineering association, in a broad green building standard.

There are many nuances to creating a green building code, which we will discuss in future posts.  Managing all of the associated parties' interests is one clear impediment to proposed green building codes. 

Related Links: 

• A Week of Epiphanies:  I Don't Mean to Diminish This But . . . (GBLU)
• The Death of ASHRAE 189? (Green Building Law)
• Uncertain Future for ASHRAE Standard 189 (BuildingGreen)

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The final Green Building Law Update epiphany for the week will come in the form of a headline I came across this past weekend:  

In the LEED:  Green certification will be the norm in a few years

Last week, Green Building Law Update focused on how the economic downturn may result in a slowdown of green building developments.  On Wednesday, we discussed how government projects should consider foregoing the green building certification process due to certification costs.  But the exact opposite is true of private developments.  Private developments should continue to seek green building certification primarily because “green certification will be the norm in a few years.” 

Why does this matter?  Well, why would you build a project now that you know will be outdated in a few years?  Others are also recognizing this factor in their green building efforts:

“I think that over time, cities will start to adopt some of the LEED standards into building codes,” CEO Bill Cawley said. “It will cease to become something that sets companies apart and start to become standard – I would think in the next five, maybe seven years.” 

Mr. Cawley also brings up another great point that relates to Wednesday’s post:  government’s should adopt LEED standards into building codes.  But that is a topic for another post. 

Are there better reasons for continuing to pursue private project green building certification in a struggling economy? 

Related Links: 

• In the LEED: Green certification will be the norm in a few years (Fort Worth Business Press)
• Projects Cut Out LEED Certification (GBLU)
• Cutting Edge LEED on the Chopping Block? (GBLU)
• A Week of Epiphanies: I Don't Mean to Diminish This But . . . (GBLU)

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In continuing our week of epiphanies, here’s another one that struck us here at Green Building Law Update:  should governments consider getting out of the green building certification process? 

Yes, I realize this epiphany is out there and that practically every state has implemented some sort of green building regulation.  Over the past few months, we have profiled green building regulations in D.C., Virginia, Indiana and Maryland, to name a few.  But the more I think about these regulations, the more I become concerned that governments should not mandate certification, particularly of public projects.

Apparently, I am not the only one with these concerns.  For example, this article cites an Evanston, Illinois official that is concerned with certification cost:

At the meeting, Evanston residents spoke about the Green Building Ordinance, which was drafted by the Evanston Environment Board. . . .  Ald. Lionel Jean-Baptiste (2nd) cited the need to look closer at the cost of the ordinance.

"It's difficult in this current economic climate for anyone to build," he said. "We need to look more into the cost, and have greater discussion at the committee level." 

And here is another example, this time a LaCrosse, Wisconsin official voicing concern over the costs for green building certification:

“When I think about all this discussion about certification and not certification, I think we’re going to do all this good stuff so let’s just declare it a green building and go home,” Supervisor John Medinger said during the Law Enforcement Center Construction Committee meeting this week. “We say it’s a green building. Who says it isn’t? I don’t mean to diminish this, but I’m trying to see what we’re going to get with this $161,000.”

With the state facing a $3 billion shortfall, Medinger said the county will take a hit and can’t afford to spend money that brings no return.

These officials represent a minority view that government’s should not mandate green building certification due to the associated costs.  But Mr. Medinger drives home the point:  what are governments getting out of certification? 

Green building certification is primarily a marketing tool used to sell a building.  Green building strategies can most definitely be incorporated without obtaining certification and the results can still be confirmed through commissioning.  What benefits are cities and states getting when their public buildings are deemed certified?

Related links: 

• Cost concerns may clash with green ordinance draft (Daily Northwestern)
• Several commissioners object to price tag for LEED certification (LaCrosse Tribune)
  
• Can state budgets support green building? (GBLU)

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Previously, Green Building Law Update wrote that the struggling financial sector may impact the number of projects seeking LEED certification. This past weekend, an article highlighting this point came across my desk that I had to share. Gazette.Net profiled numerous green building projects in Maryland that, despite initially incorporating numerous green building strategies, will not seek LEED certification:

Despite its bevy of energy-saving features, local construction material and preferred parking for hybrid vehicles, the latest office building by Matan Cos. of Frederick isn't receiving the green imprimatur of the U.S. Green Building Council.
 

Matan's RiversideFive office building — a 126,151-square-foot, four-story structure near the Monocacy River — meets the council's criteria for its Leadership in Energy and Environmental Design, or LEED, certification. But Matan is waiting until a tenant requests a LEED-certified building to actually complete the certification process, which can cost up to $2,250.
 

Matan Cos. went on to claim that LEED certification was not pursued because of owners “conscientious of savings.”  The article also highlights another development project that initially sought LEED certification and then abandoned green building strategies:

BP Solar, which is expanding its Frederick headquarters, originally sought LEED certification with a planned green roof, solar panels and energy-efficient design. Plans for going green changed when BP announced it would not complete the $97 million project to expand its manufacturing capacity, but finish only the $30 million addition for office space.
 

Photo Credit:  Matan Cos.

Related links: 

Developers cede LEED label for savings (Gazette.Net)

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Green Building Law Update would be remiss if it did not comment on the recent financial struggles and the impact these events will have on the green building industry. Simply put, here at GBLU, we anticipate scaled back green building efforts as developers struggle to obtain financing.

A recent article in Globe and Mail (Canada’s National Newspaper!) does a great job highlighting the recent financing struggle for project development. The article focuses on a major condominium project in Canada and the developer’s struggle to obtain financing:

Just eight months after frenzied buyers lined up for days to buy units of the $450-million luxury skyscraper to be erected at the corner of Yonge and Bloor Streets, the global credit and U.S. subprime mortgage crises tightened their grip . . . .

Mr. Gold moved a few months ago to seek out new financing partners. Conditions are getting tougher, but the location and quality of the project helped him sign on two European pension funds, Mr. Gold said.

While this developer was able to find new sources of financing, the article points out that “it’s the marginal projects that could get hurt.” Additionally, as financing becomes harder to come by, developers may be forced to “scale back their projects.”  While Mr. Gold’s project apparently is not seeking LEED certification, if Mr. Gold had been forced to scale back the project due to a lack of financing, LEED certification may have been on the chopping block. Unfortunately, as developers fail to obtain financing, green building certification may be one of the first components of construction projects to be eliminated.

Do you agree or disagree?

Related links: 

• Kazakh company erecting 'bold' tower at Yonge-Bloor (cbcnews.ca)
• Developers struggle to secure financing (Globe and Mail)
• Architects Hit Hard by Financial Crisis (Architectural Record)
• ‘A good time to build unless you have to borrow’ (Char. Business Journal)

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This week at GBLU, we are focusing on the Shaw Development v. Southern Builders case, the first significant example of green building litigation.  On Monday, GBLU explained the importance of the case and reviewed the basic facts.  Today GBLU will review the most important part of the case, the contract between the parties and accompanying green building responsibilities.  

Why is the contract the most important part of this case?  The contract is the primary means for dictating a contractor’s green building obligations.  Shaw Development and Southern Builders relied on an AIA A101-1997 Standard Form of Agreement Between Owner and Contractor as their general contract, which did not include green building requirements.  Additional requirements were incorporated through a Project Manual that made specific reference to green building certification:  

Project is designed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.” 

Shaw Development’s AIA contract and incorporated Project Manual lack clarity in articulating Southern Builders’ responsibility for constructing a LEED Silver certified project.  While the Project Manual does state that the project was designed to comply with LEED Silver certification, it does not assign the contractor responsibility to construct the project according to LEED Silver certification.  Instead, as stated in A101-1997, the contractor is responsible for building according to the designs and specifications.  Thus, the contractor could be liable if it failed to build according to plans and specifications, which resulted in a failure to achieve LEED certification. 

Owners and contractors are well served to clearly describe the contractor’s responsibilities related to the construction of a green building project.  If your green building contract looks anything like the contract from Southern Builders v. Shaw Development, you should think about revising it. 

Related Links

• The Anatomy of America's First Green Building Litigation (gbNYC)
• The First LEED Lawsuit...Great.... (Real Life LEED)
• Open the Floodgates:  The Era of Green Building Litigation (Greener Buildings)

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Last week, we discussed the Virginia General Assembly’s attempts to pass green building legislation in 2008. Virginia Governor Tim Kaine was also forced to weigh in on his preferred green building rating system in 2008.  Previously, in 2007, Governor Kaine indicated his preference for the LEED rating system in Executive Order 48: 

“All agencies and institutions constructing state-owned facilities over 5,000 gross square feet shall be designed and constructed consistent with the U.S. Green Building Council’s LEED rating system (including the use of Virginia forest products with alternate certifications) or the United States Environmental Protection Agency/Department of Energy’s ‘Energy Star’ rating.”

The Governor’s original proposed budget in 2008 did not include green building provisions.  As part of the budget process, the Governor’s budget was sent to the General Assembly to undergo legislative amendments and the following provision, which includes Green Globes, was added:  “All new and renovated state owned-facilities . . . that are over 5,000 gross square feet shall be designed and constructed consistent with the . . . U.S. Green Building Councils LEED rating system or the Green Globes rating system.”  Governor Kaine vetoed the inclusion of Green Globes but the General Assembly overrode the veto. 

The debate over green building rating systems continues to play out in Virginia and other states across the country.  GBLU looks forward to monitoring the 2009 Virginia legislative session and further green building legislation.  Virginia’s choice of a green building rating system will have a significant impact on the Virginia cities due to a peculiar statewide rule, which we will discuss next week.

Related Articles: 

More Green Building Legislation May Be Imminent for Garden State (gbNYC)

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You may remember that in previous posts, GBLU warned that September was going to be a big month for green building regulations in Washington D.C. It was anticipated that the D.C. City Council would vote on new green building codes on September 16 but the codes were tabled to allow for more feedback from affected parties. But there was still significant green building regulations voted on yesterday in D.C.

Late Monday night, H.R. 6899, the Comprehensive American Energy Security and Consumer Protection Act, was passed by the House of Representatives by a vote of 236-189. The big story will be that an energy bill was passed that permits more oil drilling off U.S. Coasts. But as expected, the legislation also included green building mandates. 

Among these mandates is Title IV – Greater Energy Efficiency in Building Codes. This section requires the Secretary to update the national model building energy codes and standards at least every three years to achieve specific overall energy savings, compared to the 2006 IECC for residential building and ASHRAE Standard 90.1-2004. From prior discussions, you may remember ASHRAE 90.1-2004 is the energy standard used by the USGBC’s LEED rating system. 

But GBI’s Green Globes rating system also found its way into the legislation. Under Title VI – Green Resources for Energy Efficient Neighborhoods, the legislation described requirements for both residential and non-residential projects seeking HUD assistance. Among these requirements, to qualify for HUD assistance projects can comply with one of numerous green building standards:

1)      The national Green Communities criteria checklist

2)      The gold certification level for the LEED for New Construction rating system, the LEED for Homes rating system, or the LEED for Core and Shell rating system

3)      GBI’s Green Globes assessment and rating system; or

4)      The National Green Building Standard

It seems peculiar that this legislation would require LEED gold certification but not include a similar requirement for Green Globes. Like the LEED rating system, Green Globes awards “globes” for each level of certification. The equivalent of LEED gold certification would be achieving three globes through Green Globes. 

Word on Capitol Hill is that the Senate is likely to adopt a different version of energy legislation so it is unclear whether green building mandates will be included in the Senate’s version.   

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